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If recalcitrant borrowers don't pay up, can unleashing ‘MAO' teams do the trick for banks? The experience of Bank of Maharashtra seems to suggest so.
No, the public sector bank is not setting armed militants of the ‘Red-kind' on its borrowers.
All that BoM is doing is constituting teams, christened ‘Many Against One' (MAO), comprising staff and officials to persuade/counsel those borrowers who play hard ball when it comes to repaying their dues.
Once the bank's recovery team shows up at the borrower's house/office to talk to him about his dues, the borrower normally commits to pay up to avoid embarrassment.
The MAO teams, which are drawn from branches, micro asset recovery cells and asset recovery branches, have been able to achieve a fair amount of success in effecting recoveries, according to Mr A.S. Bhattacharya, Chairman and Managing Director, BoM.
The bank has been able to recover almost Rs 400 crore in the first half of the current financial year through the 20 micro asset recovery cells, five asset reconstruction branches and MAO teams.
‘Power of many'
“We realised that when a bank official singly approaches a defaulter for recovery, the latter doesn't pay much heed. We then hit upon the idea of power of many against one to convince the borrower to pay up,” said a bank official.
No strong-arm tactics
The MAO team's mandate is only to talk to the borrower. They cannot resort to strong-arm tactics.
The teams have proved effective against small borrowers who owe the bank up to Rs 10 lakh, said the official.
About 59 per cent of the bank's total NPAs of about Rs 1,100 crore as on September 2011 are on account of small borrowers.
The Mangalore-headquartered Corporation Bank too has been resorting to innovative recovery practices. By ‘naming and shaming' wilful defaulters it has achieved success in recoveries.
Taking a cue from the rogues-gallery that is ubiquitous in all police stations, the bank displays photographs and details of wilful defaulters on the notice boards of branches from where they have taken loans. Besides, it also puts up hoardings outside the branches with photographs and details of wilful defaulters.
Once borrowers realise that their ‘wilful defaulter status' is in the public domain, they repay the dues owed to the bank for fear of social ostracisation.
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